The dollar index dropped to a 2.25-month low, pressured by Fed-friendly US economic reports and liquidity boosts. US Nov payrolls rose stronger than expected, while Oct retail sales were weaker. The dollar faces concerns about a dovish Fed Chair appointment by President Trump, with a likely candidate being Kevin Hassett.

EUR/USD rose to a 2.5-month high, supported by a report showing German Dec business sentiment at a 5-month high. However, Eurozone Dec S&P manufacturing PMI contracted sharply. The euro benefits from divergent central bank policies, with the Fed expected to cut rates further in 2026 and the ECB done with rate cuts.

USD/JPY fell as the yen rose to a 1-week high against the dollar due to weak US economic data. Japan’s Dec S&P manufacturing PMI reached a 6-month high. The BOJ is expected to raise interest rates at Friday’s policy meeting, with markets pricing a 95% chance of a rate hike.

Gold rose, while silver fell slightly. The dollar’s decline and dovish US economic reports support precious metals. However, gold’s gains are limited by expectations of a BOJ rate hike, and silver is pressured by weak manufacturing data in the US and Eurozone.

Central bank demand for gold remains strong, with China’s PBOC increasing gold reserves and global central banks buying more in Q3. Silver is supported by tight inventories in China. Long liquidation pressures have impacted prices, but silver ETF holdings are rising.

Overall, the markets are reacting to economic data and central bank policies, affecting currency and precious metal prices. The outlook remains uncertain, with geopolitical risks and central bank actions playing a significant role in shaping market trends.

Read more at Yahoo Finance: Dollar Pressured by Dovish US Economic Reports